Legalization Of Private Finance Theories And Case Analvsis

Since the reforming and opening up, Zhejiang has ranked in the forefront over the country for the fast development in the private economy and private finance. After the outbreak of credit crunch in Wenzhou, informal finance has attracted more and more attention. Due to the expansion of market scale, the style of trading in private financing has changed, thus making traditional folk financing mechanisms fail.As a third-party implementation mechanism, the legal system has a good substitution effect. Therefore, the issue of legalization of private finance research has an important theoretical and practical value.The paper is divided into three parts. Firstly, through the status quo research of private financing in the United States and Taiwan etc., the paper concludes two modes in guiding private financing development. On the basis of explaining the status of private financing in our country, government needs to legalize it for private financial market had already changed and its self-enforcing mechanism had been unable to guide the healthy development of private finance,.Secondly, through the study of private financing mechanisms, the paper analyses the behavior of gamers ’s choice in the current environment in two mechanisms.Besides, this paper analyses of the role of the legal played in private financing decisions detailed. Thirdly, on comparing the development of private financing in Wenzhou with that in Taiwan, it shows that the legal system can promote the development of private financing.Through the mechanism and case studies, this paper concludes that legalization is necessary, feasible and effective. In the process of building the legal system, government can take different forms in different legal regulatory path.Lower levels of private financing can not be regulated within the boundaries; the higher level can be considered in terms of private financial market entry and exit system, trading activity monitoring system and risk monitoring system.